Monday, January 25, 2016

"The Good Trump Has Done"


Sydney M. Williams



Thought of the Day

“The Good Trump Has Done”

January 25, 2016



At dinner recently, it was observed that, while Donald Trump’s candidacy is vexing to the Republican establishment, it has served a useful purpose. The argument made was that people across the political spectrum have been forced to confront issues they otherwise would have avoided. Not being a Trump fan, and abhorring the term “establishment,” at least when applied to myself, I listened, considered and found merit in her theory. Washington’s political elite, molded in correctness that is too often self-serving, encourages bad policies and ignores reality, have, as Peggy Noonan recently wrote, eroded “the power and position of the American working class,” while raising themselves to the ranks of the exclusive. 



In Hans Christian Anderson’s tale, “The Emperor’s New Clothes,” two weavers (actually two thieves who claimed to be tailors) promised the emperor a new set a clothes, a suit so fine that only those who were not stupid could see it. Finally, the suit was ready. Of course, there was nothing to be seen; but, for fear of being called stupid, the emperor pretended to admire what he could not see, thanked the tailors, and when asked to parade down the street in his “new clothes,” eagerly agreed.



The people saw the emperor as he was born. But, again, for fear of being called stupid, they ignored the obvious and applauded. Until finally a young boy cried out: “The emperor is naked!” Pretty soon, everyone else first began to murmur and then shout the same thing, “The emperor is not wearing any clothes!” The emperor realized the truth, but preferred to think the people stupid – to persist in the charade, of which he was its victim.



The story has relevance. It has relevance in an environment where hypocrisy abounds, in which a politician’s personal life is at odds with their message. It has relevance in a world in which personal sanctimony replaces collective empathy. While the elite on both sides of the aisle are guilty in this regard, it is the Left that is most protective of their turf. Liberals are like actors, choreographed to a belief in their infallibility. They are supported by sycophants, whose job is not to challenge but to support, and by a mainstream media that editorializes rather than reports and, especially, by Hollywood where fame is mistaken for wisdom – where Leonardo DiCaprio, for example, can seriously suggest we leave fossil fuels in the ground. Mr. DiCaprio’s brilliance as an actor is matched by his lack of common sense.



The adulators who serve as advisors to the President and members of Congress are the tailors. They build moats and erect barricades that delude those they serve into believing they are flawless. Unlike the tailors, they do not do this to deceive (or have fun) with their bosses, but to keep the power that comes with an association of those in command. The emperor is the political elite. The naive people, mouths agape, are ourselves.



Donald Trump is the boy who verbalizes our instincts: That political correctness does more harm than good; that fear of Islamic terrorism may justify a harsher stance toward Muslim refugees; that border security cannot be ignored; that Hillary is a liar and her husband a womanizer; that Jeb Bush lacks energy; that Obama has weakened our country, both domestically and globally.



Unintentionally, in demonizing Trump, the Left helps him. For example, a few Leftist extremists recently formed a McCarthy-like organization, #StopHateDumpTrump. Included among their founders are such liberals (I use the word facetiously) as Noam Chomsky, Michael Moore and Jane Fonda. I don’t particularly care for Donald Trump, but threats to silence any individual with whom one disagrees is far more dangerous to a liberal society than letting Mr. Trump spout off. SHDT (I love the acronym!) is trying to muscle the media into giving him less airtime. Free speech is part of the foundation on which our liberty is based. And the media has a right to focus on who and what they will. They have, after all, a bottom line to consider. I generally disagree with the content of the New York Times, but I understand their right to editorialize as they wish. Illiberal attempts to shut down Mr. Trump will backfire.



The phenomena that is Donald Trump’s candidacy deserves study. It is a unique reflection of our current society. It may portend a realignment of our political parties. (Note the front page article in Sunday’s New York Times on Michael Bloomberg.) It is certainly more meaningful than the candidacy of Bernie Sanders, who represents the past more than the future. Socialists have been prevalent in our culture and politics for more than a century. Eugene Debs and Norman Thomas both ran for President numerous times. We have had Socialist mayors and members of Congress. Well known and revered authors, like Jack London, Upton Sinclair and Carl Sandberg were Socialists. But we have never had anyone quite like Mr. Trump run for President. Herbert Hoover was a businessman. But he had served as Secretary of Commerce for Presidents Harding and Coolidge, and during World War I headed up the European Relief and Rehabilitation Administration, which saved perhaps nine million lives. Trump, as the New York Times crossword puzzle would have it, is an oner.



While I have made no secret of my opinion that Donald Trump would not make a good President, I have also been wrong about him. I expected that people would find his arrogance off-putting. I had thought that by now he would have been hoisted by his own petard. But, like many others, I misread the mood of the country and the resentment of the average person toward the Washington establishment - that it is not just the one percent against the ninety-nine percent; it is Washington against the people - that the actions of those who represent us have not matched the campaign promises made. They are delusional, living in a world where facts don’t matter. Working-class Democrats listened to Mr. Obama in 2008, when he promised unity, fairness and an end to wars. What they got was the most racial divisiveness in fifty years, a wealth transfer to the richest people in the country and an expanded, never-ending war. They are angry; Trump has tapped into that anger. His anger mimics their own.        



Mr. Trump is humorless; he shows little respect for those who disagree with him. He has alienated those whose appearances are different from his. He is nativist in his domestic policy suggestions and protectionist internationally. As a businessman he certainly knows how to negotiate, but he also is an expert in the art of cronyism. As the head of a private business, he is used to dictatorial-like powers. That may work in the private sector, but governing a democratic republic, filled with individuals of myriad opinions, the ability to delegate, compromise and to persuade are critical to success. Political leadership involves knowing what star to follow, but recognizing that the path is not straight.



As a conservative, I believe in the principles of limited government, the separation of powers, the sanctity of our basic rights, liberty and the rule of law. I am not convinced that Mr. Trump does. However, there is no question he has enlivened the process; however, in doing so he has put emotion above reason. He has , though, brought politically incorrect subjects to the foreground – issues that need to be discussed openly and honestly and that are critical in the give and take of ideas; for that we should be thankful. In brief, I believe his candidacy has had a positive influence; but not if it serves to get him nominated or elected.

Tuesday, January 19, 2016

"Things fall apart; the center cannot hold..."


Sydney M. Williams



Thought of the Day

“Things fall apart; the center cannot hold…”[1]

January 19, 2016



My wife and I surprised ourselves. We didn’t move to the right or the left. We did what we believed to be sensible, and the responsible thing for ourselves and our children. We moved into a retirement community. We are not old. (Of course, that allegation is relative. I turn 75 later this month and Caroline is two years older.) We are physically active and have all our marbles, or, at least, I believe I do; though my grandchildren don’t always find my sense of humor amusing.



We did not make this move to escape what seems an increasingly discombobulated political environment. However, I admit that a respite is desirable, if just to maintain one’s sense of moral balance. This is especially true in an election year, and particularly so when the leading candidates are as distant from the center as they are. But extremism begets extremism. When dissatisfaction with the present and disillusionment for the future is rampant as it is, candidates and the electorate to whom they appeal hug the fringes. It is enough to make one want to slip beneath the counterpane, wishing for the morrow.



Speaking of retiring, President Obama gave his final State of the Union address last week. It is the moment when exiting Presidents look back and cite their accomplishments, or, at least, present what they have done in a favorable light, and then present their vision for the future. It is the natural way.



Mr. Obama is a good speaker, as long as his teleprompters function. Last Tuesday he was his eloquent self. He told the usual lies and made the expected exaggerations. He took more than the usual jibes at the opposition. His narcissism, as usual was on display. But, with a straight face, he said his biggest regret was a lack of compromise, an increase in unilateral decisions and a corresponding decline in civility. Most of us share that regret. But where does blame lie? Who was it in early 2009 that responded to a query from Representative Paul Ryan: “I won; you lost!”? Who was it that said to Republicans later that same year: “I’m driving; you’re in the back seat!”? Which Speaker admonished skeptical members of Congress when the Affordable Care Act was being considered: “We must pass this bill to find out what’s in it!”? If Mr. Obama had deliberately set out to sabotage any sense of commonality, he could not have done better.



Leopards don’t change their spots, and ideological politicians don’t adapt policies to changing situations. So, in his address, Mr. Obama continued to disseminate the discord he has sown for the past seven years. He condescendingly suggested Republicans who don’t buy into his theory of climate change – that man is its cause – are so dense they must have denied that the Soviets launched Sputnik in October 1957. His argument suggests that if man would only reduce greenhouse emissions to zero, the ocean’s would recede and storms would abate. It is a waspish argument, uttered superciliously, which precludes intelligent debate.



The stock market, the next day, voted with its feet, down 2.2 percent. The decline in the Dow Jones Averages is 8.25% for the year, one of the worst starts on record. The loss approximates one and a half trillion dollars, roughly equal to a third of what our profligate federal government spends in a year. The Left, naturally, reports any negative news affecting Wall Street with glee, ignoring the fact that all workers with a pension or individual retirement plan are dependent on capital markets for a secure retirement.



The greatest threat internationally continues to be the threat of Islamic jihadist terrorism. Yet, other than a derisive slap at Senator Ted Cruz and an isolated comment about “tough action,” the subject got little air time in the State of the Union. Perhaps it was because Debbie Wasserman Schulz, Democratic National Committee Chairwoman, had invited members of CAIR (Council on American-Islamic Relations), a jihadist-linked organization, to the speech. 



Mr. Obama must believe in what Albert Einstein once said about reality being only an illusion; though he also exhibits traits of Walter Mitty and Dylan Lawson. Regarding Islamic terrorism, he lives in Peter Pan’s make-believe world of Neverland. Despite Major Nidal Hasan shouting Allahu Akbar, as he shot thirteen American soldiers, it took the President six years to term the Fort Hood massacre an act of terrorism, rather than “work-place violence.” Islam, according to the President had nothing to do with the incident. The year 2016 is less than three weeks old, yet killings by Islamic jihadists persist. An Islamist suicide bomber killed ten tourists in Turkey. A series of six explosions, attributed to ISIS, killed seven people in Jakarta. The Burkina Hotel in Burkina Faso’s capital city was attacked by an affiliate of al Qaeda, killing 28 people. Dozens were killed by Islamic militants in the Syrian city of Deir al-Zor. Hundreds of women in Cologne, on New Year’s Eve, were molested by testosteronic young Muslim men. In Philadelphia, dressed in a long, flowing white caftan and using a stolen nine millimeter pistol, Edward Archer shot, at point blank range, a policeman. He told authorities he was acting in the name of Allah. Nevertheless, the mayor Jim Kenney, a disciple of President Obama, assured the press that Islam had nothing to do with that incident. The cause, he made clear, was too many guns. TROP (The Religion of Peace), an organization that tracks world-wide Jihadist attacks, reported that in the past thirty days, there have been 155 global Islamic jihadists attacks, killing 1551 people. The West, with its mantle of political correctness, denies what is happening at its peril.



Widespread dissent is not uncommon in the United States, most obviously during the Civil War. But there have been other periods. During the 1960s and ‘70s, civil and women’s rights, along with Watergate and anti-Vietnam War sentiment made for contentious times. As Karl Rove recently noted, the 1890s were a time when the country was divided between the agrarian South and Midwest and the industrialized and moneyed Northeast. But calming Presidents helped soothe troubled waters. William McKinley helped unify the nation when he was elected in 1896. President Gerald Ford served the same purpose in 1974. This President has encouraged, not tempered, dissent.



As we head into the upcoming election, it is the person of reason and empathy we should look for – a man or a woman who both loves and respects the Constitution. The Country is facing an uncertain future, not only the war with Islamic terrorists, but domestically in unfunded entitlements that, left unaddressed, will bring financial ruin. The problem cannot be allowed to fester. We do have choices: We could raise taxes to pay for what has been promised; we could raise the retirement age; we could means-test payments; we could reduce in aggregate what is being paid out, or we could increase the workforce. These are issues that need to be openly discussed and debated.



Obviously, the best answer is to increase the workforce by growing the economy more rapidly. Even that may not solve the long term problem, but it would alleviate its symptoms. There is room to do that, as millions left the workforce over the past eight years. The economy needs tax and regulatory reform. Growth is dependent, above all else, on a sense of confidence in the future – something we have lost. That, of course, means seeking compromise, something that no longer seems part of our political DNA. We have wandered too far in the direction of an imperial Presidency – to a place beyond what is good for democracy. It is time to do something sensible, as my wife and I have chosen to do.



[1] The line is from William Butler Yeats’ poem, “The Second Coming,” published in 1919, in the aftermath of World War I.

Monday, January 11, 2016

"The Case foor Incrementalism"


Sydney M. Williams


Thought of the Day

“The Case for Incrementalism”

January 11, 2016



The case for incrementalism is based on the observation that extremism – whether from the right or the left – does not work in a country that prizes freedom. A democracy, by definition, is not efficient. It is not meant to be. It cannot totally satisfy all people with their myriad opinions, but it should satisfy most and be representative of the people.



Unfortunately, extremism has characterized politics for the past seven years and perhaps longer. Mr. Obama came to the White House promising to heal the wounds caused by an election in 2000 that many Democrats felt was illegal and from two wars that had grown increasingly unpopular. Instead, rifts deepened.



Immediately following the election in 2008, compromise went the way of the Dodo bird. The American Recovery and Reinvestment Act of 2009, the Affordable Care Act and Dodd-Frank – all passed with no (or minimal) support from the opposition. This “my way, or the highway” attitude on the part of the imperious Barack Obama has also led to deteriorating relations with Israel, an aggressive Russia, a rogue North Korea and a confrontational China. It brought about a premature troop withdrawal from Iraq, “leading from behind” in Libya, the abandonment of principle in Syria and a nuclear deal with Iran, perhaps conceived with good intentions, but executed in such a manner that it could turn the Middle East into a nuclear maelstrom. And, it has led to re-establishing relations with the most repressive Communist regime in the Western Hemisphere, Cuba.



Mr. Obama’s executive orders last week to tighten rules regarding gun control is another example of extending Executive power. As mentioned in prior pieces, I am no fan of guns; so am not averse to registering all firearms and limiting sales through registered dealers. My objection is not that his orders violate the Second Amendment; I suspect they do not. My objection is that he talks of gun control when he should be discussing means of tracking illegal guns and keeping them out of the hands of suspected terrorists, criminals and the mentally ill. While he used Sandy Hook as a backdrop, even his supporters admit that nothing he said and did last Tuesday would have prevented Adam Lanza from killing 20 first-graders and six of their teachers at Sandy Hook elementary school, nor would it have stopped Tashfeen Malik and Syed Rizwan Farook from slaughtering fourteen innocents at a Christmas party in San Bernardino. Mr. Obama did mention enforcing existing laws more aggressively, but that is his job as President, a position he has held for seven years. Why has he not done so? For this sin of omission, he cannot blame the NRA, Congress, Republicans, or his predecessor.



Mr. Obama is only the latest example (though perhaps the most blatant since Lyndon Johnson and Richard Nixon) in a series of Presidents who have expanded the power of the Executive, at the expense of Congress. The fault lies with both branches, but it has been the Executive that has become the “Alpha dog.” Congress just rolled over. The separation of powers was not an idle codicil casually added to the Constitution. It is, in many respects, its essence. It was inserted to protect the people against another George III.



This tilt of power away from Congress toward the President has put the nation at risk, in at least two ways. First, from an economic perspective, and second from a political one. In the aftermath of the credit crisis, Congress reneged on its responsibility to pass fiscal and regulatory reform legislation. In fact (which was not the fault of Congress) Mr. Obama refused to consider the findings of the Simpson-Bowles Commission, a Commission he had formed. The consequence was that the Fed became the only game in town.



Additionally, for the branch of government that controls the purse, Congress has acted irresponsibly. While current federal spending, relative to GDP, is close to the forty-year average of 20%, the composition of that spending has changed dramatically. For example, mandatory spending (outlays controlled by laws; i.e., entitlements) was 30% of the federal budget in 1962. Today, it is more than 60%. Social Security spending, for example, has gone from 13% of the budget to about a third. Discretionary spending – which includes defense and the only part of the budget subject to annual appropriations – has declined from approximately 60% to about 34 percent. The other item in the federal budget not subject to annual appropriations is interest expense. The principal beneficiary of low rates has been government. They mask the enormous increase in federal debt, now more that 100% of GDP. (It was 90% at the end of 2010, a year and a half after the recovery began!) When interest rates return to some normal level, which they will, the discretionary part of the budget will shrink further. A safety net is needed, but fiscal irresponsibility has put us on a path that could undo our democratic system. Justice Louis Brandeis once noted: “Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficent.”



The second way in which the President and Congress are hurting our nation is in abandoning the notion of representative and limited government. While I have a philosophical objection to the notion of term limits – people should be able to vote for whomever they choose – Congress, in my opinion, has lost that right. They have effectively created a class of elite bureaucrats whose job security is only exceeded by their higher-than-average incomes. The tax code today exempts almost half the people from paying federal income taxes. A declining tax base and an increasing number of people receiving entitlements – a situation in which more people feed at the trough than contribute to its contents – places the Country at risk.



Perhaps, you might ask why – with a profligate yet emasculated Congress when it comes to its “separate but equal” powers – should we not have a more powerful executive who can better balance the needs of the people with the resources available? The answer is the loss of freedom that would ensue. Democracies are fragile and inefficient, but they allow people to speak, write, assemble and pray as they choose. Their strength is in their collective people. What value should we put on freedom? Over the years we have seen what happens when people lose freedom. What is freedom worth? It is priceless. Democracies are subject to manipulation by strong leaders, aided by a press that prefers propagandizing to reporting. The human condition is such that powerful men (and women) take advantage of weakness. The spectrum of political options is not linear, as often perceived. It is circular, with each end reaching behind so that they come together in cruel and impoverishing ways. We have only to study the first half of the Twentieth Century to understand that Nazism, Fascism and Communism had more in common with one another than not. All three systems practiced discrimination on scales incomprehensible to us today. All three deprived their citizens of their basic rights. All three murdered millions of their own people. All three forced the vast majority of their people to live in extreme poverty. All three were a consequence of extremism.



While many may consider my warnings to be no more than the hyperbole of a biased observer, I look at the situation as similar to the driver of a car who lurches from right to left and then back again. As he attempts to correct back toward the middle, the tendency is to over-compensate. Each change in direction exaggerates the swings, until the car loses control and crashes. We need to return to a government more respectful of the people – to a government that recognizes it is servant to the electorate. When charisma is valued more highly than character, we have begun the descent – whether toward the left or the right is immaterial – into the darkness of tyranny. The best way to get back on track is through certain but incremental reform, an education system that makes mandatory the study and understanding of our Constitution, and the election of a President who cares more about the country he is serving than the legacy he leaves behind. If those be the determinants, neither Trump nor Clinton need apply.        




Monday, January 4, 2016

The Month That Was - December 2015


Sydney M. Williams

The Month That Was
December 2015

                                                                                                                                 January 4, 2016

“I heard the bells on Christmas day
Their old, familiar carols play
And wild and sweet the words repeat
Of peace on earth, good will to men!”
                                                                                                        “Christmas Day” 1863
                                                                                                        Henry Wadsworth Longfellow

We ended the year with the good ship ‘United States’ rudder-less, in a threatening sea and captained by an imperious and aloof President – an Ahab fixated on his dislike for America’s imperious past and determined to amend it in his own image. Prospects for the upcoming Presidential election, at least given the two individuals who lead their respective Party’s polls, are dispiriting. On the one hand we have a megalomaniac, a man who approaches politics as though he were hosting a fantasized-reality TV show. His narcissism exceeds his respect for his fellow man. On the other, we have an arrogant and supercilious woman who feels the crown is her due – a consummate liar who measured her success as Secretary of State, not in terms of bringing peace to the world’s hot-spots or in treaties enacted but by miles flown and countries visited. While the present is daunting, the future – unless our choices are different – scares the bejezus out of anyone who loves their Country, has knowledge of its history and is endowed with common sense.

Sadly, we have reached a point where Lincoln’s depiction of the United States seems no longer to apply. We have become a “government of the elite, by the elite, for the elite.” The “people,” apart from their votes and their money, are no longer relevant. Washington politicians are a class unto themselves, with mainstream media as their PR department. We listen to President Obama talk of fairness, of wealth and income inequality; yet the divergence has grown sharper during the past seven years. We listen to Mrs. Clinton claim she speaks for the “little” people, while subverting the system to her own financial benefit. Donald Trump is adored by what was once termed the “silent” majority – those who believe that the Country they see is not the one they knew. Yet they ignore his past crony-like ties to politicians of all persuasions.

Mr. Obama sees his mandate as clear: rule by executive order, avoid coopting the opposing party, dismiss laws that do not accord to his ends. The consequence has been a less stable world; a people divided by race, religion, wealth and income; a population grown fearful of an enemy that will not be named; an anemic economic recovery that has seen work-force participation numbers at forty-year lows; the shuttering of more businesses than those that start-up, and an increase in the numbers of people in poverty.

But enough of my emotive and partisan blabbering. On to the month of December – what did it bring, besides Christmas and Hanukah? Domestically, the defining moment came in San Bernardino when two radicalized Islamists, Syed Rizwan Farooq and his wife Tashfeen Malik snuffed out the lives of fourteen of Farooq’s co-workers at the San Bernardino County Health Center’s Christmas party. The killings highlighted weakness in our immigration system and made clear that Islamic terrorists are neither contained nor on the run. While the Northeast is enjoying the warmest weather on record, forty-three people died in storms that hit seven western and mid-western states over the Christmas weekend. One effect of those tornedos, heavy rains and early snow has been a rising Mississippi. Republicans held their fifth debate on December 15, attracting 18 million viewers. The focus was national security and jobs. Four days later, on the Saturday before Christmas, the Democrat National Committee was successful in keeping viewership to fewer than 8 million during that Party’s third debate. The point for the DNC: do nothing to derail the nomination of Mrs. Clinton. Paul Ryan, newly elected Speaker of the House, has grown a beard. Whether to disguise his intentions or to audition for Santa Claus is unknown. ‘Star Wars: The Force Awakens’ opened with record audiences, taking in over $1 billion by the end of its second weekend.

Elsewhere, NASA announced it is accepting applicants for the Class of 2017 to train for a manned mission to Mars in the 2030s. Elon Musk’s SpaceX’s Falcon 9’s booster rocket landed back on its launch pad – a first, and a step forward in the use of re-useable rocket boosters. Taking demands for equality to unchivalrous levels, Secretary of Defense Ashton Carter announced that women would be eligible for all combat roles. Another 5300 e-mails from Hillary Clinton’s private server were released on the last day of the year. This time, several had portions redacted, as the State Department claimed they contained classified information. This was despite Ms. Clinton’s prior allegation that none did. Proving P.T. Barnum correct, video maker Ami Horowitz got fifty students at Yale to sign a petition calling for the abolishment of the First Amendment. Beagles became the first dogs to be born by in vitro fertilization. Will sexless procreation cause recreational sex to evolve out of existence? Not in my life time, I hope!

The December climate talks in Paris – the boondoggle of all boondoggles, with forty thousand people from 195 countries descending on the City of Light, all at taxpayer’s expense – dominated the international agenda. Merrily, attendees returned to their respective countries, filled with self-praise for an agreement that was not binding. As the month came to an end, Iraqi forces re-took the city of Ramadi, the largest city in Al Anbar Province, about 70 miles west of Baghdad. We can only hope it is indicative of a weakening ISIS and a strengthening of coalition forces. However, like the Hydra, Al Qaeda and the Taliban are resurgent in Afghanistan. Good news came from Venezuela where Nicolas Maduro’s Chavista Party was soundly defeated in National Assembly elections, with the opposition coalition (Democratic Unity Roundtable) winning a solid two-thirds majority. However, eight of those seats are being challenged by Mr. Maduro’s hand-picked judges. In another positive piece of news, two leaders of neighboring nuclear nations met for the first time in years when India’s Prime Minister Narendra Modi made a surprise visit to Pakistan where he met with Nawaz Sharif, Pakistan’s Prime Minister.

Political correctness, an American concoction, was exported to England where students at Oxford’s Oriel College are lobbying for the removal of a statue of Cecil Rhodes for being “imperialist and colonialist.” Each year eighty-nine students are chosen from a dozen or more countries to study for two years at Oxford. Americans like Bill Clinton, Cory Booker and Bobby Jindal were able to do so because of funds Mr. Rhodes provided. As the Financial Times wrote in a recent editorial, “Airbrushing out figures because they offend our contemporary values is no way to approach the study of history.” Without knowledge of our past, we have little hope of coping with the future. In other news, Vladimir Putin’s lapdog, John Kerry, has come around to the idea that Assad should remain in power in Syria.

True to its word, the Federal Reserve raised the Fed Funds and Discount rates by twenty-five basis points to a quarter of one percent and half of one percent respectively. For most of the post-War era, Fed Funds have been between four and five percent, with the Discount rate usually 100 basis points higher. It is not the increase that is of import, it has been the seven years of abnormally low rates that is of significance. “Free” money has done little to lift the economy. Broadly speaking, interest rates rose during the first thirty-five years following the end of World War II. They have fallen during the last thirty-five years. During both periods, the economy rose and so did equities.

While stock prices during the month declined modestly, oil prices continued sharply lower, losing about 13% during the month and about 35% for the year. December showed the lowest close for oil since February 2009. The yield on High-yield (junk) bonds rose, with the yield on the FINRA-Bloomberg High-Yield Index ending the year at 9.06%, the first year-end close above 9% since 2009. (Keep in mind, the yield on junk bonds has been rising since mid-2014.) The year was a tough one, especially for value investors like Warren Buffett, with Berkshire Hathaway’s stock price down about 12 percent. The DJIA and the S&P 500 were both down for the year, the first decline since 2008. On the other hand, technology stocks had a good year, with the NASDAQ 100 posting an 8.4% increase. Financial markets never remain static. On the day in March 2000, when the NASDAQ 100 first climbed above 4700 – it closed at 4593.27 this year – Berkshire Hathaway made its low. While I do not believe that speculation is anywhere close to what it was sixteen years ago, I also do not believe that we can assume that last year’s winners will finish first this year.

Sobering, in terms of what it means for future employment and economic growth, was a study from the National Bureau of Economic Research released this month. It noted that the number of startups declined over the past several years: “There is now robust evidence, from multiple data sources,” wrote authors Ryan Decker of the Federal Reserve, John Haltiwanger of the University of Maryland, and Ron Jarmin and Javier Miranda of the Census Bureau, “of a pervasive decline in U.S. business dynamism over the last several decades.” We are seeing a lack of willingness to invest in the future, an indication of declining confidence. That lack of confidence, in my opinion, is the fault of a complex tax code that favors the wealthy and large businesses, along with burdensome regulations that especially affect smaller businesses.

December, like all months, carries with it anniversaries. One hundred and fifty years ago, on December 6, 1865, the United States ratified the 13th Amendment, abolishing slavery throughout the nation. December 7, 1941 is a day that will “live in infamy,” as it marked the date when Japan attacked the U.S.’s Pacific Fleet at Pearl Harbor. The 12th of December would have been Frank Sinatra’s 100th birthday. And, from a personal perspective, the month will always carry a level of poignancy for me, as it was the month, many years ago, that my parents and oldest sister died.

Samuel Berger, President Bill Clinton’s former national security advisor, died at age 70. Natalie Cole, daughter of jazz legend Nat King Cole, died at age 65. Stein Ericsen, 1952 Olympic gold medalist, died at age 88 at his home in Park City, Utah. Ericsen always had a special place in my heart, as my first competition skis were Stein Ericsen’s. I got them in 1955, kept them all these years, and now my son Sydney has them.   Death also claimed a friend, Charlie Flood. Charlie and I usually disagreed when it came to politics, but his intelligence and acerbic humor always made him a delightful companion.

Among the odder news items during the month, the National Safety Council cited “distracted walking” as a leading cause of death and serious injury. And Maryland Governor Martin O’Malley, campaigning in Iowa, had only one person show up for an event in the town of Tama. After the one-on-one meeting, according to a CBS reporter, “Kenneth” remains “undecided.”

The new year began crisp and clear, with seasonal temperatures, at least in this part of Connecticut. We can only hope that the New Year’s Day temperateness and clarity bode well for the year ahead.


Happy New Year!